How travel startup funding shaped up in 2024

Amid what has proved quite a bleak year for travel startup investment, a number of deals have stood out in 2024.

Companies that come under the broad banner of hospitality technology have secured significant funding demonstrating the ongoing belief from the investment community that modernization can drive real change and efficiency compared to current systems and processes.

Mews, with its funding round of $110 million announced in March is a good example, as is Guesty with $130 million announced in April.

More recently, Lighthouse announced $370 million in growth investment and Hostaway just last week landed $365 million.

And, investors in travel have clearly stated their interest in this area. Chris Hemmeter of Thayer Ventures, a top investor in travel in 2024 and an investor in Mews, listed the accommodation tech stack, vertical software and services as one of the areas the venture capital firm was focused this year.

These are generally B2B companies that are viewed as having proven business models, are prudent with costs and have a path to growth.

In fact, Phocuswright's Travel Startups Interactive Database revealed funding into B2B travel companies overtook B2C investments this year for the first time accounting for 51% of total funding as of Q3 2024.

Investments that stand out beyond hospitality technology include TravelPerk's $104 million D1 round at the beginning of the year, $150 million announced by Ramp in April and Hotel Engine (now Engine) secured a $140 million investment in September. Also, included in the later stage roundup are Series Ds for Exoticca and Tourlane, which landed €60 million and €25 million, respectively.

Funding low

Despite these bright spots, across the whole travel startup landscape, funding for 2024 is expected to be similar to 2023's figure of $5.2 billion, which was at an almost 10-year low.

Funding into travel startups for the third quarter of 2024 stood at $4.2 billion, according to Phocuswright's figures. At the time, the number of funding rounds was around 186 and was likely to reach 250 by the end of the year. The figure will be the lowest activity on record.

But despite all talk of there being fewer rounds and smaller investment amounts overall, some in the investment community believe this might mask the real picture.

In a LinkedIn post in late November, Cara Whitehill, vice president of Thayer Ventures and founder of Unlock Advisors, said it's possible fewer deals are being reported with travel tech startups "no longer announcing bridge rounds publicly and even with primary funding rounds are often waiting months before announcing the funding."

She said this has artificially skewed the investment picture compared to a few years ago.

One trend noted this year is the prevalence of seed and some earlier rounds going into travel startups. In Q3, once again it was the hospitality-focused companies that secured funding. Myne, for example, added €40 million in Series A funding for its vacation home co-ownership platform while vacation rental management business Host & Stay landed £10.5 million and Landfolk, also a rental management business, announced Series A funding of €10.3 million. Blueground was the outlier with its $45 million Series D announced in late March.

In general, however, investors agree that while there have been plenty of seed stage deals, the real deal count for Series A, B and C has declined.

Some have attracted those rounds however including Bob W's Series A of €40 million, Fetcherr, ($90 million in Series B) and Canary Technologies ($50 million Series C), which were announced in June. And, just this week API connectivity and distribution specialist Nuitee announced $48 million in a Series A round.

The Investor View panel at The Phocuswright Conference 2024 discussed this trend as well as the fact that larger rounds are happening, as seen above, but it's for fewer companies.

Positive outlook

Overall the panel, which was made up of Mia Morisset of Inovia, Gilad Berenstein of Brook Bay Capital and Betsy Mule of F-Prime Capital, was positive, however, with investors in agreement that there's more money coming into the industry and a healthy appetite for travel technology investment.

One other positive touched on by the panel was the fact that investors including Accel, General Catalyst, Inovia and Lakestar have all raised new funds recently.

And new investors in travel such as Gaingels have emerged. As part of the PhocusWire Top Investors of 2024 article, we asked the company what it is looking for in travel.

"We look at the business opportunity to create a large, sustainable company, in a large enough market to drive substantial returns. This also relies on evaluating the company's competitive advantages either rooted in technology, product or team, and its unit economics. Finally, and probably the most important element we consider is the founding team. Co-investors and valuation come into play too, but they are less central to our investment decisions," said Lorenzo Thione, managing director of Gaingels.

So, what might all this mean for 2025?

Drawing on the positives from investors touched on above such as the availability of funds from larger venture capital firms and opportunity seen in travel technology, it should be a better year for travel startups. Inovia, for example, expects later stage rounds to make a comeback "fueled by secondary transactions and strategic consolidation plays reshaping the travel and tech landscape."

The other trend being watch by all of the travel industry, startups and investors included, is how artificial intelligence is developing. Hostaway's plan for its recent raise includes a "war chest" for AI development. Other travel technology companies are likely to follow suit. PhocusWire will continue to track investments including a focus on the companies recently named in the Hot 25 Travel Startups for 2025.